Business Intelligence (BI) is the ability to transform data into information and information into knowledge, so as to optimize the business decision-making process. A set of strategies and tools focused on knowledge creation and management through the analysis of existing data from an organization or business.
From the point of view of information technology, we can say that BI is a set of methodologies, applications and technologies that allow a business to the group and transform the data obtained from structured information systems to do analysis and information generation and improving the process decision-making of the business. It covers both current understanding of the functioning of the business as well as an anticipation of future events, in order to provide a body of knowledge to support business decisions.
Referring to business intelligence, we can differentiate the concepts of data, information and knowledge. Data is something that is vague, for example, the number 10, while the information is more accurate, such as April sales were 10. Finally, knowledge is obtained by analyzing the information.
Data are the minimum semantic unit and are the primary elements of information. These alone are irrelevant to the decision-making process. A phone number or a name of a person are examples of data.
The data can come from external or internal company sources, can be objective or subjective, qualitative or quantitative.
Moreover, the information can be defined as a set of processed data, which are relevant and have a purpose and context. The information is useful for decision-making, as it allows reducing uncertainty. The data is transformed into information to add value.
The information is capable of changing the way the receiver perceives something, impacting on their value judgments and behaviors.
Information = Data + Context (value added) + Utility (reduce uncertainty)
Knowledge can be defined as a mixture of experience, values, information and know-how, that form a framework to incorporate new experiences. The knowledge derived from the information and information from data. In order that information becomes knowledge is necessary to perform actions such as:
· Comparison with other elements.
· Prediction of consequences.
· Searching for connections.
· Talk with other carriers of information.
By gaining knowledge of the business once the information is captured from all areas in the business, you can set strategies and define what are the strengths and weaknesses of the business.
Business Intelligence is the broader concept of the use of intelligence in organizations. This has emerged from the contributions of the various areas of information such as market intelligence, competitive intelligence and business intelligence.
Market Intelligence corresponds to the strategic management discipline within companies that allow a more deeply know of the market and the company’s performance within it, through a constant flow of information.
Competitive Intelligence is defined as the process of collecting and analyzing information on the activities of competitors, so as to support the achievement of the goals of the business. Through a continuous flow of information, allows a business to know what the competitors are doing in the commercial, financial, and organizational aspects.
Finally, Business Intelligence refers to the set of tools to extract business experience. A set of systems to delineate dynamic customer base, such as sales trends, niche value, customer churn, profitability segments.
Intelligence tools are based on the use of information systems that bring together data from production processes, information relating to the business and economic data.
Using the techniques to extract, transform and load (ETL), data extracts from different sources, are purified and prepared for a load them into a data repository.
This toolkit has the following features:
• Access to information. The data are the primary source of this process. Systems have to ensure user access to data regardless of the source of these.
• Support the decision making process. Beyond the presentation of information, users need access to analysis tools, and select the data that interest them.
• Orientation to the end user. Independent expertise of users, these systems, must provide facilities that allow users to use these tools.
Business intelligence acts as a strategic factor for a business to build competitive advantage, by providing privileged information to respond to business problems: entering new markets, product promotions or offers, eliminating islands of information, control finances, cost optimization, production planning, customer profiling analysis, profitability of a particular product.
The main business intelligence products that exist in the market are:
• Balanced Scorecards (BSC) are tools to establish and monitor the objectives of the business and its different areas or units.
• Systems Decision Support (DSS) corresponds to interactive information systems that help companies make decisions, using data and models to solve unstructured or semi-structured decision. Supports decision making by generating a systematic evaluation of different alternatives or scenarios for decision.
• Executive Information Systems (EIS), are systems that provide top executives easy access to internal and external information that is relevant to their critical success factors. The Executive Information Systems support the decision making process of senior executives of an organization, presenting relevant information and using visual aids and easy to interpret, in order to keep them informed.
In reference to the origin of the data, existing components are: Datamart and Datawarehouse.
A Datamart is a departmental database, especially in storing the data that is specific to the business area. It is characterized by having an optimal data structure, to analyze information from all perspectives that affect the department.
Moreover, a data warehouse is a corporate database, characterized by integrating and debug information from one or more sources in order to allow analysis from many perspectives.
On the other hand, a Business Intelligence solution establishes a cycle from the following activities:
• Observe: what happens?
• Understand: Why is it?
• Predict: what will happen?
• Collaborate: what actions you should take the team?
• Decide: which way forward?
Why is it so important Business Intelligence?
For a business to be successful, it is very important the ability to make accurate and quick business decisions. Traditional information systems tend to be inflexible structures, making it difficult to adapt to the data capture processes of the business, and rapid generation of information for decision-making.